Saturday, January 18, 2014

The media recently provided us with a mostly adulatory free-for-all summing up Michael Bloomberg's years as mayor. Did all that coverage avoid placing appropriate focus on the major story that most deserved it, even when attention was paid to Bloomberg’s wealth?

Bloomberg left office as mayor December 31, 2013, and there was no end to the articles summing up what Mr. Bloomberg theoretically accomplished and had `bestowed' upon the city. A few of these articles mentioned Bloomberg's wealth. The New York Times article that likely did so most directly and with the most detail had some fun with its subject, engaging in some peculiar calculus, an estimation that over the past twelve years that Michael Bloomberg was mayor of New York City he spent about "$650 million" (an “undoubtedly low” estimate according to the article) on things associated with the way he ran his office. Some of the expenditures sounded almost like gifts to the public, given that taxpayers theoretically didn't pay for them, . . Things like about $62,400 to clean fish tanks Bloomberg installed in City Hall, noshes for his City hall Staff, private planes for his aides to travel. See: Cost of Being Mayor? $650 Million, if He’s Rich, by Michael Barbaro and Kitty Bennett, December 29, 2013.

Clean fish tanks and bagels notwithstanding, what really boosted and comprised a substantial portion of the $650 million figure the Times reporters came up with are the huge sums Bloomberg invested to stay in office, retain and firm up his control of it: “He poured at least $268 million of his personal funds into three campaigns for mayor” and hundreds of millions of dollars “to New York arts, civic, health and cultural groups, personally and through his company, Bloomberg LP” (I won’t give the article’s figure for the charities because if you look at the figures in the Times article and its links I think you will find the amounts grossly understated), and “$23 million” in campaign donations (again understated?).

It appears the Times reporters used a mixture of research and access to generate the story:

To calculate Mr. Bloomberg’s spending, The Times relied on public documents, travel records, philanthropy databases, conversations with vendors and interviews with his government employees.

$650 million seems like a figure sufficient to arrest our attention and perhaps bemuse, but where was the summing up of the really much bigger numbers representing the really big picture? Whatever Bloomberg might have been spending while in office, however many hundreds of millions that was, it is nothing compared to the wealth he was accruing at the same time. Further, to inform the public that Bloomberg was a relatively rich man when he entered office and throughout his tenure isn't telling the most important part of the important story about his wealth even if people garner from the telling that Bloomberg left office a lot richer than he came in, which he absolutely did. The real story is the phenomenal, unusual, rate at which his wealth increased while he was theoretically directing a significant amount of his attention to the job of running the city, and not supposedly to the elevation of his wealth.

People are utterly inured to the idea that rich men could be getting richer. "The poor stay poor, the rich get rich" is, after all, a line of Leonard Cohen's song, "Everybody Knows" (1988), a song that also choruses that everybody also knows "the dice are loaded," but the axiomatic sentiment goes back eons in the popular culture, appearing similarly in the 1921 Tin Pan Ally hit by Richard Whiting, Raymond Egan and Gus Kahn', "Ain't We Got Fun": "There's nothing surer, The rich get rich and the poor get poorer.""Everybody Knows" came out toward the end of Ronald Reagan's presidency. "Ain't We Got Fun" was popular throughout the pre-Great Depression Roaring Twenties and for long afterwards.

Whatever was the case then when those sentiments were lyrically enshrined, wealth has sincethose times "become more concentrated in the hands (and bank accounts and houses) of the richest Americans." See: July 10, 2012, Richer Rich, and Poorer Poor, by Catherine Rampell, New York Times.

The share of national income flowing to the rich is at a record high even surpassing 1929. 95% of the increase in American income since 2009 has gone to the top 1%. This is because, in contradistinction to the aftermath of the Great Depression where income rebounded commensurately with losses across economic groups when the economy recovered, the benefits from the economy’s rebound since the last downturn, the Great Recession, has gone almost exclusively to the top 1%. Incomes are actually shrinking for the “bottom 90% of earners.” See: Daily chart- The rich get richer- Sep 12th 2013, by R.A., J.S. and L.P, the Economist. (If you like the charts in this NNY article you’ll like the one on this Economist article.)

Although the economic the recession of 2008 brought about a brief dip in the income and wealth of the wealthiest, including Bloomberg, from which Bloomberg recovered, the widening gap between the wealthy and the rest of us is part of a long-term, escalating trend. In his documentary, “Park Avenue: Money, Power & the American Dream” about wealth disparity, and as particularly exemplified by the particularly wealthy and well-known set of individuals living in 740 Park Avenue, film maker Alex Gibney (at about 10 minutes in) presents a traveling scan of a chart showing the widening gap over the years between the average incomes of top 1% and everybody else, the bottom 99%. It’s startling. Below is a rough pasting together of the chart that streams by in the film. Notice how the income of bottom 99% percent undergoes little perceptible escalation, but the income of the top 1%, especially recently, skyrockets, creating an ever more vast differential in status.

Income of the 99% escalates almost imperceptibly, but income for the 1% mountains way up

Ergo, the overall all context is clearly established: The wealthy are getting proportionality more wealthy than the rest of us and the growing gap is very significant. Bloomberg is one of the wealthy, but when it come to wealth he isn't part of the overall pack. . . . That's because he's way ahead of it.

Even many of the wealthiest are experiencing disparity between their wealth and the wealth of the even wealthier still, a widening one at that. As we'll see, Bloomberg, with his unusual accelerating accumulation of more wealth is a disparity laid atop that disparity. The chart above shows incomes. Although accumulating a substantial income is perhaps the best avenue to wealth (Ben Franklin's advice about saving pennies, notwithstanding), income it isn't wealth. The chart below is one that shows wealth: The average net worth of wealthiest the “Forbes 400" wealthiest individuals from 1982 to 2011, represented in billions of dollars. See: Economic Policy Institute- The State of Working America.

Even within this very select “Forbes 400" group, one can differentiate in order to measure and track the relative status of different members of the elite club. The chart below does that, with three lines, the middle of which shows the “average” income of that “Forbes 400" group over the years 1982 to 2009. At first glance, the line tracking that average may be comfortably in the same neighborhood as the other two lines, the one that shows the entry-level price for admission to the “Forbes 400" group and the one that shows where the club tops out. Actually, the lines, although on the same chart, are in very different and vastly spread. See that $950 million entry-level qualification figure, the $3.2 billion figure for the average and the $50 million figure for the top wealth figure?: The top figures being tracked are more than 50 times the bottom figure!

How does the escalating wealth of Michael Bloomberg during these years stack up against this chart? See the figure provided and the charts below. Once upon a time, not so very long ago, his wealth was relatively close to the entry-level price of admission to the club. It headed up when he got interested in politics and around the time he becomes mayor it crosses the line for the average member of the “Forbes 400" club. While mayor, Bloomberg became the wealthiest New Yorker,* his wealth skyrocketing past that average. Before he leaves office it gets into the neighborhood of those at the top of the “Forbes 400" list.

(* Bloomberg was eventually overtaken in this specific regard by David H. Koch who, although he doesn't similarly hold an elected office himself. is very much involved in politics and influencing those that do.)

* For more on how Bloomberg's wealth declined (because he didn't see the financial crisis coming?- And how the press missed it) see: Bloomberg Update: Fire and Ice (Sunday, April 12, 2009)

** Respecting this:
Direct campaign expenditures were about $105 million. Bloomberg, in his
three bids for mayor, easily burned through more than $250 million in
direct campaign expenditures. Taking into account funds Bloomberg spent
indirectly for political purposes you get into billion dollar figures.

*** Bloomberg was still reported to be New York City's richest New Yorker in March of 2010 but in September 2010 was surpassed
by David H. Koch, one of the two equally wealthy brothers providing
substantial funding to the Tea Party. It is to be observed with some
interest that Bloomberg's accretion of wealth substantially accelerated
when Bloomberg got involved in politics. In August of 2010 people began writing about how David Koch and his brother Charles were funding the Tea Party, which started to emerge in the beginning of 2009 (i.e. just weeks after Obama’s January 2009
inauguration.) Looks as if it can be very good for one’s financial
status to get involved in politics! (Though to be fair the Kochs were
involved in politics before the advent of the Tea Party.) The brothers' privately-owned Koch Industries is a diversified conglomerate that had its origins in crude oil refining and still has substantial investment in pipelines and refineries. Consequently, Koch Industries has a history of accidents, spills and pollution of the environment.

As mentioned, Noticing
New York has also reported on the history of the mayor's "charitable"
giving, which is important because the mayor is at the very top of the
list of such spenders in this country. The
last Noticing New York article noting the update available respecting
Bloomberg's $350 million beginning-of-the-year donation Bloomberg gave
to his alma mater, Johns Hopkins University, is: Wednesday, January 30,
2013, Latest (Early) Update On Bloomberg’s “Charitable” Giving- A Preview Of 2013? (Added to Info For Years 1997 to 2011).
With an infusion of that kind of money into New York City's libraries,
the Bloomberg administration's pretextual rationale for selling libraries to real estate developers
would disappear.

Below in chart form is updatedinformation about Bloomberg’s level of giving and the years of associated Bloomberg political campaigns.

$26.6 million:- Bloomberg’s charitable gifts in 1997
(when he distributed to 433 groups). Handouts have increased every year
since - Press mentions of Bloomberg philanthropy begin this year$45 million:- Bloomberg’s charitable gifts in 1998 - Year Bloomberg started talking publicly about running for mayor$47 million:- Bloomberg’s charitable gifts in 1999$100.5 million:- Bloomberg’s charitable gifts in 2000 (579 organizations)- Year before first mayoral election campaign$122.5 million:- Bloomberg’s charitable gifts in 2001 (540 groups) Was elected mayor in November $130.9 million:- Bloomberg’s charitable gifts in 2002 (655 groups) Became mayor$135.6 million:- Bloomberg’s charitable gifts in 2003 (653 groups) $138/139.9 million*:- Bloomberg’s charitable gifts in 2004 (843 groups)$143.9 million:- Bloomberg’s charitable gifts in 2005 (987 groups)- Second campaign for mayor in connection with the 2005 election$165.3 million:- Bloomberg’s charitable gifts in 2006. (1,077 groups)$205 million:- Bloomberg’s charitable gifts in 2007.- The year he started to run for president.- The year he left the Republican party$235 million:- Bloomberg’s charitable gifts in 2008 (1,221 recipient groups)- The year that Bloomberg started running for his third term as mayor and overthrew the city’s term limits restrictions. $254 million:- Bloomberg’s charitable gifts in 2009
(1,300 organizations). 2009 was the year that Bloomberg was elected in
November to his third term as New York Mayor after spendingapproximately $105 million
in acknowledged direct spending on his campaign (many multiples of what
his challenger could raise from the public) and, in addition,
Bloomberg's political aides (also holding public posts) get fabulously
huge bonuses for campaign work.$279.18 million:- Bloomberg’s charitable gifts in 2010 - Bloomberg ranked the #2 American "giver", "giving" to "arts, human services, public affairs, and other groups". 2010 was the year that Bloomberg shifted his charitable spending,which
had always concentrated on New York City recipients, to focusing on
recipients connected to issues of national significance.$311.3 million:- Bloomberg’s charitable gifts in 2011 - Bloomberg ranked the #5 American "giver," "giving" to "1,185 arts, human-services, public-affairs, and other groups". $370 million:- Bloomberg’s charitable gifts in 2012 - According to information from Bloomberg's own website, in 2012 "$370 million was distributed by Bloomberg Philanthropies across its areas of focus" although that would apparently qualify Bloomberg to be listed amongst the top 50 givers list for 2012 put out by The Chronicle of Philanthropy, where for some reason he does not appear for this year. The discrepancy is strange. Was someone thinking as NNY has suggested that his "giving" doesn't actually qualify as such?$350 million (and counting):- Bloomberg’s charitable gifts in 2013.

Noticing New York has previously produced this annual wealth and charitable giving information in the form below.

The figures above for Bloomberg's increasing annual wealth also chart out this way.

That looks like it might possible overlay with the chart of average increasing wealth of the “Forbes 400" that appeared above (and for easy reference is repeated below). . . .

. . . Until you realize that each of these two charts must be radically reshaped in order to be accurately overlaid with each other (see chart below) because even though the average wealth of the “Forbes 400" is going up it is doing so far more gradually, depicted on that chart over a far longer period. That average is now far, far less than Bloomberg's wealth even though within the charted time frame Bloomberg's wealth started out at a low figure that was hardly at the entry level price of admission to be on the chart at all.

When adjustments are made to properly overlay the charts Bloomberg's terrifically escalating wealth almost makes the escalating wealth of the rest of the wealthy look like it has flat-lined.

The two previous charts, reshaped so that they can be overlaid, showing how Bloomberg's increasing annual wealth makes the increasing annual average wealth of the rest of the "Forbes 400" look virtually flat by comparison

It
is important to keep track of Bloomberg's wealth and "charitable"
spending because Bloomberg was a public official and the earning of his
wealth is subject to many conflict-of-interest concerns. At the same
time, cycling around, that wealth was routinely deployed for political purposes
that included the "charitable" spending above. The charitable spending
cited above does not reflect the non-tax-deductable augmenting amounts the
Bloomberg donates to political campaigns and causes mentioned by the Times when it calculated its $650 million figure mentioned at the outset of this article.

It will be interesting to see in what direction Bloomberg’s wealth goes now that he is out of public office. If his wealth was truly related to his personal business acumen we might expect his wealth to increase even more now as he has more time and attention to devote to his Bloomberg, L.P, business. The New York Times has reported, just 18 days after Bloomberg’s departure from office, that he is diving into the affairs of his business empire in a very hands-on way. See: After Leaving Office, Bloomberg Is More Hands-On at Old Company, by Nathaniel Popperjan, January 17, 2014.

On the other hand, what would it say if Bloomberg’s departure from city office resulted in a leveling off of his accumulation of wealth or even its decrease? That same Times article notes that the financial fuel for Bloomberg L.P. came from its sale of “$20,000-a-year data terminals” (sold, we should add, to almost all the big companies with which the New York City did business), and that recently:

terminal sales have slowed and there has been a reorganization of the newsroom, leading to the departure of some of the company’s most respected journalists.

The article notes that although Bloomberg’s previous practice was to focus on the “much more lucrative data terminal business, and was not known for attending editorial meetings” he is now involving himself in the news side of the organization, sitting in with the TV operation and media group on the fifth floor of the Lexington Avenue Bloomberg tower.

The article notes a problem, reported last spring, that could affect sales of the financial terminals: abusing a conflict-of-interest access, “some reporters had used a function on the data terminals to monitor client activity.” The article didn’t note that Bloomberg while mayor breached City Conflict of Interest Board proscriptions when he monitored the sale of his terminals to companies doing business with the city.

Yes, it will be interesting if Bloomberg's spectacular increases of wealth disappear with his departure from office and, if they do, what explanation is offered.

Another way of looking at the overlaid charts that doesn't quite restore the average "Forbes 400" wealth chart to "normal," which would be more like . . . . (see below)

1 comment:

I believe that the amount of Mr. Bloomberg's wealth is not known but estimated based largely in the value of Bloomberg, L.P. However, Bloomberg, L.P. is not publicly traded and its value must be estimated. I have read that it has suffered a loss of terminals outstanding in the last year or so and so may have lost some value.

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NOTICING NEW YORK & NATIONAL NOTICE are both independent entities managed by Michael D. D. White of Hop-Skip Enterprises. Michael D. D. White is an attorney, urban planner and former government public finance and development official. *** Noticing New York covers New York development and associated politics. National Notice covers national policy and economic issues *** Contact: MichaelDDWhite(at)gmail.com